About 1.8 billion people in the world don’t get enough exercise. Physical inactivity is a global problem—but there are solutions. That’s one of the big themes in Sporting Goods 2025, a report published by McKinsey in partnership with the World Federation of the Sporting Goods Industry (WFSGI). This fifth edition of the annual report is titled, “The new balancing act: Turning uncertainty into opportunity.”
In a recent webinar, four of the report’s authors—namely, McKinsey Partners Alexander Thiel, Eric Falardeau, and Pamela Brown, as well as Emma Zwiebler, CEO of WFSGI—discussed the 2025 edition’s main takeaways. Excerpts from the webinar are featured in the latest episode of the McKinsey on Consumer & Retail podcast. The following is an edited transcript of the episode.
A softer growth outlook
Alexander Thiel: Welcome, everyone, to today’s presentation and discussions on the findings of the fifth annual Sporting Goods report. I’ll start with a quick overview of the five main themes we identified in this report, which we will go through in this presentation.
Number one: chasing elusive growth and rethinking the value chain. Slowing growth forecasts are increasingly compelling executives to focus on a dual agenda: on the one hand, revenue growth, and on the other hand, productivity improvements.
The second topic, and maybe the most important one, has to do with physical inactivity. Today, there are more than 1.8 billion people—that’s more than double the population of adult India—who are inactive. And that, on the one hand, is a tragedy. On the other hand, as Emma will show us, it’s an opportunity.
Third, Eric will talk about an active lifestyle as an identity. Fourth, Pamela will lead us through what we call market share upheaval, with large incumbents being challenged to up their game. And fifth, I will talk about the boom in live sports and the blurring of the lines between sports and entertainment.
But let’s start with a few numbers and an updated outlook. If you’ve read our previous reports, you’ve probably observed that we now have a slightly softer growth outlook of 6 percent annual growth from 2024 to 2029, down from 8 percent prepandemic and 7 percent in the last two to three years. These developments are driven by a number of factors. Balancing revenue and productivity is critical for many companies, and that double focus means that growth is a priority, but not always the only—and not always the first—priority. Another factor is that we see increasingly cautious consumers prioritizing nondiscretionary items, often holding back on discretionary spend, shifting to lower-priced retailers, and generally decreasing their loyalty to brands even further.
It’s important to adapt to this behavior, but overall, it also means a softer outlook. Geopolitical uncertainty, of course, plays a role, too. Per our latest research, everyone is concerned about it and everyone is expecting significant impact here.
We should talk about one theme that we also discuss in the report: sustainability. It remains a priority, but it faces trade-offs with short-term business factors. The percentage of executives who prioritize sustainability is actually down to just above 50 percent, down from two-thirds last year. And consumers are equally conflicted. The intent-to-action gap—the difference between people who say that sustainability matters and people who are actually willing to pay for it—is larger than ever before.
With that, I’ll hand it over to Emma to talk about physical inactivity and the opportunity it presents.
Physical inactivity: The biggest untapped market
Emma Zwiebler: Thanks, Alex, for the overview. As we move into chapter two of the report, we are actually returning to a familiar theme: rising physical inactivity levels and the implications for the sporting goods industry, on both a global and local basis.
Physical inactivity continues to rise—and it’s not something we can categorize as a temporary setback, or something linked to the COVID-19 pandemic. According to the latest data published by the World Health Organization in 2024, we’re now at 31 percent of adults globally being deemed inactive. That’s up five percentage points since 2010 and is projected to rise even further to 35 percent by 2030.
And unfortunately, when we look to youth—the next generation of consumers, fans, and employees—the situation is worse. We are looking at 81 percent of that community being deemed inactive. The WHO has already calculated that, if nothing changes, if this inactivity trend continues, 500 million more people will fall into ill health as a direct result of inactivity—so, no other causal factors—and at a cost of $300 billion to public health systems.
What does that mean for us? Well, more sick people means fewer people moving and buying your products. It also means a less productive workforce. And, of course, it means less money in the global ecosystem to resolve the issue. That’s why we’ve continued to push the message in our reports and in our webinars that this is not just a health crisis. This will be a business crisis for the industry if we do not start to take action now.
And there is no industry better placed to drive its own success and growth than the sporting goods industry. Our industry is not starting from ground zero. We are already doing a lot of work in this space. But, like any new market you try to enter, tackling the inactive population requires a different approach to business than tackling the already-active or slightly active consumer.
In our report this year, we’ve focused on three priorities that we believe industry executives should integrate into their business plans to really tap into this opportunity. Priority number one is to make investments in product innovations that don’t just get to “higher, faster, stronger,” but actually help remove barriers to physical activity.
When we look at priority number two—to launch campaigns designed to raise awareness and change perceptions of people being active—we’re really looking at one of the key strengths of the sporting goods industry, which is engagement and reach with the consumer. Here, we’re not talking about marketing campaigns focused on products, but marketing campaigns that promote the benefits of being physically active for all, highlighting real people and making movement and activity seem accessible and inspirational to people who might not necessarily have ever thought that sport or activity was something for them.
The third priority is to enhance youth engagement in sport and physical activity. We know that early, positive experiences of sport and movement is one of the key determinants in ensuring that they go on to embed physical activity and sport in their future lives. And, of course, from a business perspective, that’s how we ensure that they go into being part of our core active consumer that Eric will talk about in the next chapter.
Fitness as a core part of identity
Eric Falardeau: Focusing now on the other group—the group that is physically active—one thing that has increased since COVID is the share of people who are active who say that physical activity is a core part of their identity. So many trends have gone up and down since COVID, but this one has stuck. And this has foundational implications when it comes to what brands have the permission to do and how brands can engage with consumers as physical activity and fitness become so much more important.
The functional benefits that a brand needs to deliver on do not necessarily change: “This product is ideally catered to the activities that I do,” “This product is of good quality,” and so on. What changes when these categories become this much more important, all the way to being part of people’s identity, is the relevance and ranking of the emotional benefits that these brands and products deliver on. That’s what we see as a big opportunity. It’s permitting some brands to enter rather quickly into other spheres of activity; they’re getting permission from an existing consumer audience to do so. It is allowing some brands to develop better products to deliver in a way that they could not before.
So when we take a look at sectors across consumer discretionary spending, we think this is probably one of the best tailwinds for leading brands in the sector. It’s a tailwind for challenger brands as well because, as the audience becomes more discerning about what is made for “people like me,” it also opens up opportunities for challenger brands. That’s a good segue for Pamela, who will walk us through the next section.
A reshuffling of market share
Pamela Brown: Thank you, Eric. I’ll talk about what’s happening from the brand lens and go beneath the surface of the market that we’ve seen growing around 6 or 7 percent per year for the past several years.
What we’re seeing is that there’s growing competition between large incumbents, or legacy players, and the rest of the market. Pre-COVID, it was really the large incumbents that were setting the pace for the entire industry. But what we’ve seen since 2019 is a meaningful shift in share: three percentage points. This means that the largest incumbents created between $10 billion and $15 billion in topline value, while the rest of the market created $70 billion to $80 billion. That is a meaningful loss of market share by some of the top players.
Why is this happening? There are a few reasons. One is that these challengers and smaller brands are really speaking to the consumer that Eric has just highlighted. They’re really understanding more nuanced demands and needs in the market. COVID also opened up the opportunity for brand exploration, especially as athleisure and work-from-home-friendly apparel became the norm for a couple of years. People were all of a sudden willing to try newer brands. There’s also been increasing access to funding; in private equity markets, firms are creating more value through sportswear plays versus traditional fashion.
And finally, there are lower barriers to entry—not just in direct to consumer, where it’s easier to access consumers online, but as some of the incumbents pulled away from wholesale through the 2010s, it created a void in the market that allowed some smaller brands to take share.
There are a few things we think are important to keep in mind to continue to drive growth, both for the incumbents and for some of the smaller brands or challenger brands that are hitting scale and facing growing pains themselves. The first is about innovating and differentiating: continuing to stay true to your core and your reason for being, while at the same time always having newness out in the market. Brands that have the most visible innovation are the ones that are winning. Whether that’s a silhouette, a sole, or a particular fabric, the consumer really needs to understand that point of differentiation and innovation.
In terms of staying authentic, we’re also seeing brands that are truly consumer- or customer-obsessed: knowing who they are trying to win with, what those consumers want, and evolving with those consumers. This is always where the balancing act is quite tricky in terms of staying true to the core but then also getting to the next ring out.
With that, I’ll pass it off to Alex.
The boom in live sports and entertainment
Alexander Thiel: Last but not least, I would like to spend a few minutes on how live events and in-person experiences are flourishing, and what this means. The popularity of live sporting events has increased, with significant growth in both attendance and engagement. The global ticketing market for all kinds of live events surpassed $100 billion in 2023, and we estimate it will reach $150 billion by 2030.
Also, the demand for live experiences is blurring the traditional lines between sports, entertainment, and retail. We see more and more innovative formats that mash these up or that cross-pollinate, creating many new opportunities for both brand engagement and consumer engagement, and thereby loyalty. Many brands are very selectively leveraging mixed-use stadiums and high-experience-value events to enhance brand visibility and consumer engagement.
Similarly, we continue to observe the preference for in-person fitness and events. Especially when it comes to in-person fitness classes, we see a lot of popularity: 80 percent of consumers participate, driven by motivation, group energy, and the specific feeling that you only get when you are in a community. Across the globe and across all demographic cuts, we see rising demand for community and experience—not online, not virtual, but live.
What does this mean for brands and retailers? One, enhance in-person offerings while having digital offerings to back them up. Develop a balanced approach to cater to both in-person fitness audiences, maximizing growth opportunities by blending live and digital experiences—for example, by using virtual reality to create customized experiences. Also, leverage live and community events that are a good fit for your brand. Those could be large events, watched by millions and experienced live by tens of thousands, or a combination of smaller community-driven events through partnerships with fitness studios, gyms, sport clubs, and so on. It’s not always the ones with the most eyes on it; it’s the ones with the best fit.
What’s ahead for the sporting goods industry
We’ve now come to the Q&A. Eric, there are quite a few questions on how to balance a brand’s e-commerce growth while also maintaining relationships with traditional retailers. This is referring to the fact that quite a few brands went very aggressively direct to consumer—some with good results, some with mixed results. What would you say is best practice?
Eric Falardeau: That’s a very difficult question to answer in a generic way because it’ll be such a unique answer for each brand. But there are a few elements that I think are undeniable.
One, it’s difficult to imagine that the end answer does not include some version of both. Two, the way to get it right is to really, truly center on the consumer. The brands that get it right answer these questions really well: “What is it that I am trying to do with the consumer across these touchpoints? Where and how do I help somebody understand that I exist? Where and how do I inspire the association between my brand and an activity? Where and how do I help somebody gain confidence that my value proposition is real and meaningful?” I could go on, but the point is that those who lead in this “omni world,” for lack of a better word, are quite good at understanding exactly who your consumer and prospective consumers are, and how to best deliver on the things needed to help them continue to choose your products and your brand and accompany you in your innovation journey.
I would almost say it’s dangerous to answer the question in a blanket way across companies and brands. It’s a very different answer for different people.
Alexander Thiel: Thank you, Eric. Pamela, there are also a number of questions about the major trends shaping the future of the industry, particularly when it comes to emerging consumer preferences—things like “gorpcore” and “runningcore”—but also grassroots sports as a growing phenomenon and a potential acquisition channel. Is that something you can comment on?
Pamela Brown: I’ll start with who’s spending and where we’re seeing the value pools shift among different generations and consumer segments. First, everybody’s often focused on Gen Z and millennials—and there’s certainly spending power there—but we’re also seeing enormous spending among the group of consumers who are retired. Consumers are living longer than ever. Some consumers are retiring a bit earlier and investing heavily in their health.
Another thing we’re seeing is a real focus on women’s health. We are also seeing continued blurring of the lines between sport and fashion—the runningcore and gorpcore trends that Alexander mentioned. Another point I want to mention is that consumers are being very choosy about where their dollars are going. It’s not just lower-income consumers, but across the board, and especially in the middle, there are consumers who are willing to splurge—but selectively splurge. They’re being really thoughtful about where they’re funneling their dollars and how that aligns with their values and identity.
Alexander Thiel: Excellent. Emma, there are a few questions about physical inactivity. Specifically, where are these 1.8 billion people? Are they only in developing countries, or also in developed countries?
Emma Zwiebler: It’s absolutely not the case that these 1.8 billion people are solely located in what we would call middle- or low-income countries. According to the data published last year, the highest rates of physical inactivity globally—around 48 percent—are observed in high-income Asia–Pacific countries; in South Asia it’s around 45 percent. But the levels of inactivity in high-income Western countries, for example, are about 28 percent. So it’s definitely not a low-income-country issue. That is why, when we look at this, we see a real market opportunity because you are actually looking at an untapped market spread across some of the key core consumer markets that we already focus on.
In summary, of course we need others to play their part. The industry cannot resolve this alone; we need governments, sport institutions, and healthcare entities to play their part. But in this year’s report, we believed it was important to highlight not just the problem, but the fact that we think we have solutions across industry that can help us move forward in tackling the inactive market—not only improving the lives of those 1.8 billion people but converting them to become active consumers and growing the industry along the way.
FAQ
Q: How should brands balance e-commerce growth with maintaining relationships with traditional retailers?
A: It’s essential for brands to center on the consumer and understand their touchpoints to find the right balance between e-commerce and traditional retail. Each brand’s strategy will be unique, but focusing on consumer needs and delivering value across different channels is key to success.
Q: Where are the 1.8 billion physically inactive people located?
A: Physical inactivity is a global issue, with high rates observed in both high-income and low-income countries. This presents a market opportunity for the sporting goods industry to address physical inactivity and convert inactive individuals into active consumers.
Conclusion
The Sporting Goods 2025 report highlights
